The effect of magnetic cation substitution on the phase stabilization, ferroelectric, dielectric and magnetic properties of a lead free Na0.5Bi0.5TiO3 (NBT) system prepared byO2 atmosphere solid state sintering were studied extensively. Cobalt (Co) was chosen as the magnetic cation to substitute at the Ti-site of NBTwith optimized 2.5 mol%. Rietveld analysis of X-ray diffraction data favours the monoclinic Cc phase stabilization strongly rather than the parent R3c phase. FE-SEM micrograph supports the single phase characteristics without phase segregation at the grain boundaries. The stabilized Cc space group was explained based on the collective local distortion effects due to spin.orbit stabilization at Co3+ and Co2+ functional centres. The phonon mode changes as observed in the TiO6 octahedral modes also support the Cc phase stabilization. The major Co3+-ion presence was revealed from corresponding crystal field transitions observed through solid state diffuse reflectance spectroscopy. The enhanced spontaneous polarization (Ps) from.38 ∼C cm.2 to 45 ∼C cm.2 could be due to the easy rotation of polarization vector along the (11.0)pc in Cc phase. An increase in static dielectric response (ε) from μ.42 to 60 along with enhanced diffusivity from. 1.53 to 1.75 was observed. Magneto-thermal irreversibility and their magnetic field dependent ZFC/FCcurves suggest the possibility of a spin glass like behaviour below 50 K. The monoclinic Cc phase stabilization as confirmed from structural studies was well correlated with the observed ferroic properties in magnetically diluted NBT. © 2015 IOP Publishing Ltd.